Can landlords charge non-refundable security deposits?

Maryland Tenant Guide: Understanding Security Deposits and Non-Refundable Fees

When renting a home or apartment in Maryland, it's important for tenants to understand their rights and obligations regarding security deposits. One common question tenants often have is whether landlords can charge non-refundable security deposits. This guide provides a comprehensive overview of Maryland’s laws related to security deposits, focusing specifically on the issue of non-refundable fees.

What Is a Security Deposit in Maryland?

A security deposit is a sum of money collected by the landlord from the tenant before or at the time of moving in. This deposit serves as security for the landlord against potential damages, unpaid rent, or breach of the lease agreement.

Key Points About Security Deposits in Maryland:

• Amount Limit: Maryland law does not specify a maximum amount for security deposits, but many leases request an amount equivalent to one month’s rent.
• Separate Account: Landlords must hold security deposits in a segregated bank account kept in Maryland.
• Written Notice: Landlords must provide tenants with written notice that the security deposit is being held, including the name and address of the bank, within 30 days after receiving the deposit.

Can Landlords Charge Non-Refundable Security Deposits in Maryland?

The Law on Non-Refundable Security Deposits

In Maryland, the term “security deposit” generally implies a refundable amount intended to protect the landlord against tenant damages or unpaid rent. By statutory definition under the Maryland Residential Landlord and Tenant Act (RLLTA), security deposits are refundable, subject to lawful deductions.

• Non-Refundable Fees: Maryland law is *silent* on the specific use of the term "non-refundable security deposit." However, it clearly distinguishes security deposits from other kinds of fees.
• Allowed Non-Refundable Charges: Landlords may charge certain non-refundable fees, but these are separate from security deposits. Examples include application fees or pet fees.
• What Cannot Be Called a Security Deposit: Any advance charge labeled as “security deposit” must be refundable, except where deductions are made for damage or unpaid rent after the tenant vacates.

Practical Implications for Tenants:

• If a fee is labeled as a “security deposit” or is intended to secure performance under the lease, it must comply with Maryland’s rules for security deposits, which include refundability.
• Any “non-refundable” charges should be described clearly in the lease as fees rather than as security deposits.
• Tenants should carefully review the lease and ensure that non-refundable fees are not disguised as security deposits.

Distinguishing Security Deposits from Other Fees

Maryland law distinguishes between security deposits and non-refundable fees or charges:

Security Deposits (Refundable)

• Held to cover damage beyond normal wear and tear, unpaid rent, or lease violations.
• Must be returned within 45 days after the tenant moves out, minus any deductions.
• Landlord must provide an itemized list of deductions.
• If deductions exceed security deposit, landlord may pursue tenant for additional money.

Non-Refundable Fees (Not Considered Security Deposits)

Common non-refundable fees landlords may charge include:

• Application Fees: Charged to cover the cost of screening the tenant; fully non-refundable once paid.
• Pet Fees: A separate fee for having a pet, which is generally non-refundable and not subject to security deposit regulations.
• Administrative Fees: Cover costs like paperwork processing; should be explicitly described as non-refundable.

Important: These non-refundable fees cannot be deducted from the security deposit and must be clearly itemized in the lease.

Tenant Protections Regarding Security Deposits in Maryland

Tenants have specific rights to ensure fair handling of security deposits:

• Written Receipt: Upon payment, tenants should receive a written receipt stating the amount and nature of the deposit or fee.
• Itemized Deductions: When landlords withhold any part of the deposit, they must provide an itemized list describing damages or unpaid rent.
• Interest on Deposit: In some Maryland jurisdictions, landlords must pay interest on security deposits held for more than six months. Check local laws to confirm.
• Return Deadline: Security deposits must be returned within 45 days after the lease ends and tenant vacates.

If tenants do not receive their full security deposit without legitimate reason, they may pursue legal remedies.

Tips for Maryland Tenants Regarding Security Deposits and Fees

• Read Your Lease Carefully: Know what fees are refundable security deposits and which are non-refundable fees.
• Ask Questions: Before signing, ask the landlord to clarify any charges described as “non-refundable security deposits” to ensure they comply with Maryland law.
• Document Condition: Take photos or videos of the rental unit at move-in and move-out to support your case if deductions are disputed.
• Get Receipts: Always request and keep receipts for all deposits and fees paid.
• Follow Up: After move-out, if your security deposit is not returned timely or deductions seem unfair, request an itemized written statement. You can also seek advice or assistance from local tenant advocacy groups.

Summary

In Maryland:

• Security deposits are refundable by law and cannot be non-refundable if labeled as such.
• Landlords may charge non-refundable fees, but these are not security deposits and must be clearly identified.
• Tenants should carefully distinguish between refundable security deposits and non-refundable fees when reviewing lease agreements.
• Maryland provides tenants with protections, including requirements for written notices, itemized deductions, and timely return of security deposits.

Understanding these rules will help Maryland tenants protect their financial interests and ensure a fair rental relationship. Always review your lease terms carefully, keep a paper trail, and communicate clearly with your landlord about any fees or deposits.